Another Bill to Fix the Patent Troll Problem... Well, Part of It

Though it was paraded around as the biggest change to patent law in half a century, the America Invents Act (AIA) of 2011 failed to address many of the patent system's largest problems. In particular, patent trolls continue their deplorable business model of buying up patents and using the threat of litigation to force companies—frequently startups—to pay up or face ruinous legal fees. These trolls have a weapon of choice: overly broad software patents—many of which shouldn't have been granted in the first place.

Joining the ever-increasing crowd of lawmakers who are angry over the patent troll problem, Senator Chuck Schumer has introduced new legislation targeting the issue: the Patent Quality Improvement Act.

Previously, Senators Schumer and Jon Kyl introduced a temporary provision in the AIA to address the issue of challenging particular patents. Known as the transitional program for covered business method patents, or Section 18, this provision allows anyone threatened with infringement suits over certain types of patents to petition the PTO to review the patent's grant and scope. Importantly, the Schumer-Kyl provision lets courts stay ongoing litigation when a party institutes a challenge at the PTO. This procedure allows for more challenges to patents of dubious quality because it is cheaper and more efficient than litigation. But it has two major flaws: 1) it is limited to patents covering methods of doing business in a financial or commercial setting (such as a patent on hedging risk), and 2) the provision is temporary and is set to expire in 2020.

Enter Sen. Schumer's new bill, which amends the AIA provision. The new legislation makes the covered business method patent provision permanent and also expands its language beyond simply financial products or services, applying it essentially to all business method patents—and, thus, to all software patents.

This bill takes an important step toward combatting absurd software patents, but it is only one step—we want to see proposals like these go further. For example, we want this ability to challenge such patents to be extended to everybody and not just those threatened with suit (many other types of reexams are available to all third parties, and we believe this one should be, too). Third-party requests for reexamination serve as an important check on the PTO, which often issues overly broad patents that are harmful to the public. To be sure, patent examiners must look at many applications every year, covering all types of technology (and, when appropriate, technology that no one has ever even considered). Given that they spend an average of only 18 hours per application, it is very hard for the examiners to find the best prior art to invalidate the patents. This is precisely why we all benefit when third parties—who often know more about the technology at issue than the examiners—get involved in the process.

We have recently seen lawmakers pushing for fixes to the patent troll problem. For instance, earlier this year, Reps. Peter DeFazio and Jason Chaffetz introduced the SHIELD Act, which shifts fees so that trolls, if they lose, would have to cover legal costs and fees. Later, President Obama expressed his concern over patent trolls and called for reform. The Schumer bill is the latest positive proposal that would make life harder for patent trolls and easier for those who want to challenge those patents. We hear more legislative proposals are on the horizon, and we look forward to seeing them. While we are encouraged that each of these bills would make the world better, we can't help but wish that they would get to the root of the problem by seriously questioning the policy behind patenting software to begin with.

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